The dollar index rose to 105.1 on Tuesday, its highest level since Nov. 14, adding to Monday’s strong gains.
Dollar strengthens in the world: it reached 5-month highs due to market speculation
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The dollar reached its highest level in almost five months on Tuesdayas stronger-than-expected economic data caused investors reduce their bets on a rate cut in June by the Federal Reservewhich boosted the currency.
However, Fear of intervention by the Japanese authorities slowed the gains of the dollar against the yeneven though long-term US Treasury yields – which the currency pair tends to follow – jumped to a two-week high overnight.
The dollar index rose to 105.1 on Tuesday, its highest level since November 14adding to Monday’s strong gains after US data unexpectedly showed the first manufacturing sector expansion since September 2022. It was then at 104.92, down slightly.
The euro fell to its lowest level since mid-February at the end of the Asian session, but later it was trading at $1.0745. Data released on Tuesday showed that the slowdown in euro zone factories deepened again in March.
The pound, meanwhile, rose from near its lowest level since December to $1.2563.after data showed its manufacturing sector improved last month.
The yen was trading flat at 151.67 per dollar, after falling as low as 151.79. The yen has moved in a tight range since hitting a 34-year low of 151.975 on Wednesday, prompting Japan to step up its intervention warnings.
Yen: could they intervene in the currency rate?
On Tuesday, Finance Minister Shunichi Suzuki reiterated that I would not rule out any option to respond to disorderly currency movements.
Japanese authorities intervened in 2022, when the yen fell to a 32-year low of 152 per dollar.
Meanwhile, the Chinese yuan fell to four-and-a-half-month lows as the strength of the dollar offset the selling of the U.S. currency by state banks. The yuan fell to a low of 7.2364 per dollar on the day, its weakest level since mid-November.
Source: Ambito
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